You pay taxes on your pension if you withdraw it as capital e.g. Pilar 3a on retirement, Pillar 2 Vested Benefits on retirement, withdrawal for house purchase.
The taxation of lump-sum benefits from pension provisions varies from canton to canton, and there are four main calculation methods.
Different Calculation Methods of the Cantons
- Proportional to Income Tax Rate:
- Cantons: Federal, AG, AI, GE, LU, NE, NW, OW, SH, SO, VD, ZG
- The capital withdrawal tax is a fraction of the tax that would have been paid on a corresponding income. This can be calculated either by taking a fraction of the tax rate or the theoretical income tax, both leading to a reduced capital withdrawal tax.
- Taxation According to the “Rentensatz”:
- Cantons: GR, SZ, TI, VS, ZH
- This model is also based on the income tax rate but involves a more complex calculation. It begins by determining how high a corresponding annual pension payment would be if retirement assets were withdrawn in pension form. Then, the tax rate is determined based on the income tax rate and multiplied by the total capital withdrawal.
- Own Tax Rate for Capital Withdrawal:
- Cantons: AR, BE, BL, BS, JU, ZG
- A separate tax rate, also known as a staggered rate, is specifically applied for capital withdrawal. This rate is not dependent on the income tax rate and is listed separately in the tax law.
- Fixed Percentage for Capital Withdrawal:
- Cantons: GL, SG, TG, UR
- These cantons prefer simplicity and apply a fixed tax rate on the entire capital payment. Regardless of the amount paid out, the tax rate remains the same. However, the tax rate may appear to increase with the amount of capital withdrawal due to federal tax, which is progressive but substantially less than in other cantons.
Note: The pension conversion rate varies among cantons. Ticino and Valais use tables to convert lump-sum payments into lifelong pensions. Additionally, different retirement ages for women and men are considered in these cantons when calculating taxes.
| 50K | 100K | 250K | 500K | 1M | 2M | 5M | 10M | 20M | |
|---|---|---|---|---|---|---|---|---|---|
| AG, Aarau | 3.3% | 5.0% | 7.3% | 8.3% | 8.9% | 9.0% | 9.1% | 9.2% | 9.2% |
| AI, Appenzell | 2.4% | 3.4% | 4.7% | 5.2% | 5.4% | 5.4% | 5.4% | 5.4% | 5.4% |
| AR, Herisau | 7.6% | 8.0% | 9.0% | 10.0% | 11.2% | 11.7% | 12.0% | 12.1% | 12.1% |
| BE, Bern | 3.6% | 4.7% | 6.7% | 8.4% | 9.8% | 10.5% | 11.1% | 11.3% | 11.3% |
| BL, Liestal | 3.5% | 3.9% | 4.9% | 6.7% | 9.6% | 9.7% | 9.7% | 9.7% | 9.7% |
| BS, Basel | 3.7% | 5.3% | 8.3% | 9.5% | 10.0% | 10.1% | 10.2% | 10.3% | 10.3% |
| FR, Fribourg | 4.1% | 5.6% | 9.2% | 11.3% | 12.3% | 12.7% | 12.9% | 13.0% | 13.1% |
| GE, Genève | 3.0% | 4.7% | 6.7% | 7.9% | 8.5% | 8.8% | 8.9% | 8.9% | 9.0% |
| GL, Glarus | 4.8% | 5.2% | 6.2% | 6.7% | 6.9% | 6.9% | 6.9% | 6.9% | 6.9% |
| GR, Chur | 3.0% | 3.4% | 4.4% | 5.9% | 6.1% | 6.1% | 6.1% | 6.1% | 6.1% |
| JU, Delémont | 5.4% | 6.2% | 8.7% | 9.7% | 10.1% | 10.2% | 10.3% | 10.3% | 10.4% |
| LU, Luzern | 4.0% | 5.3% | 7.2% | 8.2% | 8.6% | 8.7% | 8.7% | 8.7% | 8.7% |
| NE, Neuchâtel | 4.9% | 5.8% | 8.0% | 8.6% | 8.9% | 8.9% | 8.9% | 8.9% | 8.9% |
| NW, Stans | 2.7% | 3.7% | 5.1% | 5.6% | 5.7% | 5.7% | 5.7% | 5.7% | 5.7% |
| OW, Sarnen | 5.3% | 5.7% | 6.7% | 7.2% | 7.4% | 7.4% | 7.4% | 7.4% | 7.4% |
| SG, St. Gallen | 5.7% | 6.1% | 7.1% | 7.6% | 7.8% | 7.8% | 7.8% | 7.8% | 7.8% |
| SH, Schaffhausen | 2.2% | 3.5% | 5.3% | 5.8% | 6.0% | 6.0% | 6.0% | 6.0% | 6.0% |
| SO, Solothurn | 3.6% | 5.0% | 7.0% | 7.7% | 7.8% | 7.8% | 7.8% | 7.8% | 7.8% |
| SZ, Schwyz | 1.3% | 2.4% | 5.9% | 8.7% | 10.7% | 10.7% | 10.7% | 10.7% | 10.7% |
| TG, Frauenfeld | 6.3% | 6.6% | 7.7% | 8.2% | 8.4% | 8.4% | 8.4% | 8.4% | 8.4% |
| TI, Bellinzona | 4.0% | 4.4% | 5.4% | 7.3% | 14.2% | 19.7% | 24.6% | 27.5% | 29.2% |
| UR, Altdorf | 3.9% | 4.3% | 5.3% | 5.8% | 6.0% | 6.0% | 6.0% | 6.0% | 6.0% |
| VD, Lausanne | 3.4% | 4.7% | 7.1% | 8.5% | 9.1% | 9.3% | 9.4% | 9.5% | 9.5% |
| VS, Sion | 4.4% | 4.8% | 6.4% | 9.3% | 10.3% | 10.3% | 10.3% | 10.3% | 10.3% |
| ZG, Zug | 1.8% | 3.4% | 5.0% | 5.9% | 6.4% | 6.5% | 6.5% | 6.6% | 6.6% |
| ZH, ZĂĽrich | 4.5% | 4.9% | 6.0% | 7.4% | 11.4% | 16.0% | 22.3% | 26.5% | 28.6% |
Assumption: Payment at age 65, single man, no religion (Source of tax data)
Source: finpension.